OFFICIAL DOCUMENTS LOAN NUMBER 8954-MA Loan Agreement (Supporting the Economic Inclusion of Youth Project) between KINGDOM OF MOROCCO and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT LOAN NUMBER 8954-MA LOAN AGREEMENT AGREEMENT dated as of the Signature Date between KINGDOM OF MOROCCO ("Borrower") and INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT ("Bank"). The Borrower and the Bank hereby agree as follows: ARTICLE I - GENERAL CONDITIONS; DEFINITIONS 1.01. The General Conditions (as defined in the Appendix to this Agreement) apply to and form part of this Agreement. 1.02. Unless the context requires otherwise, the capitalized terms used in this Agreement have the meanings ascribed to them in the General Conditions or in the Appendix to this Agreement. ARTICLE II - LOAN 2.01. The Bank agrees to lend to the Borrower the amount of forty-eight million two hundred thousand Euro (EUR 48,200,000), as such amount may be converted from time to time through a Currency Conversion ("Loan"), to assist in financing the project described in Schedule I to this Agreement ("Project"). 2.02. The Borrower may withdraw the proceeds of the Loan in accordance with Section III of Schedule 2 to this Agreement. 2.03. The Front-end Fee is one quarter of one percent (0.25%) of the Loan amount. 2.04. The Commitment Charge is one quarter of one percent (0.25%) per annum on the Unwithdrawn Loan Balance. 2.05. The interest rate is the Reference Rate plus the Fixed Spread or such rate as may apply following a Conversion; subject to Section 3.02(e) of the General Conditions. 2.06. The Borrower elects to apply the Automatic Rate Fixing Conversion to the Loan. Accordingly, without limitation upon the provisions of Article IV of the General Conditions and unless otherwise notified by the Borrower to the Bank in accordance with the provisions of the Conversion Guidelines, the interest rate basis applicable to the aggregate principal amount of the Loan withdrawn during each Interest Period shall be converted from the initial Variable Rate to a Fixed Rate for the full maturity of such amount in accordance with the provisions of Article IV of the General Conditions and of the Conversion Guidelines. 2.07. The Payment Dates are April I and October I in each year. 2.08. The principal amount of the Loan shall be repaid in accordance with Schedule 3 to this Agreement. -2- ARTICLE III - PROJECT 3.01. The Borrower declares its commitment to the objectives of the Project. To this end, the Borrower shall ensure that the Project is carried out in accordance with the provisions of Article V of the General Conditions and Schedule 2 to this Agreement. ARTICLE IV - EFFECTIVENESS; TERMINATION 4.01. The Effectiveness Deadline is the date one hundred twenty (120) days after the Signature Date. ARTICLE V - REPRESENTATIVE; ADDRESSES 5.01. The Borrower's Representative is its Minister of Economy and Finance. 5.02. For purposes of Section 10.01 of the General Conditions: (a) the Borrower's address is: Minist&re de l'Economie et des Finances Quartier Administratif Avenue Mohammed V Rabat Kingdom of Morocco; and (b) the Borrower's Electronic Address is: Cable: Facsimile: MINFIN 212-537-76-40-81 5.03. For purposes of Section 10.01 of the General Conditions: (a) the Bank's address is: International Bank for Reconstruction and Development 1818 H Street, N.W. Washington, D.C. 20433 United States of America; and (b) the Bank's Electronic Address is: Telex: Facsimile: 248423(MCI) or 1-202-477-6391 64145(MCI) -3- AGREED as of the Signature Date. KIN OMO OROCCO Title: Minister of Economy and Finance Date: May 29, 2019 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT By Authorized Representative Name: Marie-Francoise Marie-Nelly Title: Country Director Date: May 29, 2019 -4- SCHEDULEI Project Description The objective of the Project is to increase access to economic opportunities for youth in the Project Area. The Project consists of the following parts: Part 1. Promoting Youth Employability and Economic Inclusion 1. Establishment and operationalization of the Youth Employment Centers (Espaces Emploi Jeunes or EEJ), through the following activities, including: (a) as needed, the rehabilitation/upgrading of the facilities hosting the EEJs including purchase of goods and financing of Operating Costs; (b) the carrying out of awareness campaigns on the Project activities and information-sharing events on existing Borrower's programs; (c) the carrying out of youth profiling and skills assessments and development of different pathways towards greater employability; (d) the carrying out of technical and soft skills training; (e) the organization of job workshops and other relevant workshops; (f) the provision of required technical assistance to the EEJ to carry out the activities mentioned above; and (g) the development and/or adaptation of disruptive technologies. 2. (a) Provision of technical advisory services for, inter alia: (i) the design of frameworks for the monitoring and evaluation of skills training activities carried out under this Part 1.2; (ii) the development of tools to improve labor market skills demand; and (iii) the provision of training to relevant stakeholders on the use of the frameworks and tools developed under (i) and (ii) above; (b) carrying out of qualification training and retraining; and (c) provision of financing of payments under the Eligible Expenditure Program (EEP) in support of promoting the employability and economic integration of youth beneficiaries through the carrying out of apprenticeship training, all in accordance with the provisions set forth in Schedule 4 to this Agreement. Part 2. Fostering the Entrepreneurial Ecosystem and Supporting Entrepreneurship Opportunities for Youth 1 . Development of a network of physical centers to support entrepreneurship and economic development of young entrepreneurs through the following activities, including: (a) as needed, the rehabilitation/upgrading of these physical centers, including purchase of goods and financing of Operating Costs; (b) the selection of a service provider to manage the centers and ensure delivery of targeted services to entrepreneurs; (c) the provision of support for the organization of relevant regional entrepreneurship stakeholders; and (d) the development of a digital platform for access to the network's information and services provided by said centers; and (e) the provision of required technical assistance to the centers to carry out the activities mentioned above. -5- 2. Development of a regional entrepreneurship support program through the provision of financing of payments under the EEP for: (a) the selection of eligible business development service providers to carry out the following activities: (i) the carrying out of awareness campaigns on entrepreneurship opportunities and information-sharing events on the Borrower's regional entrepreneurship program being developed; and (ii) the provision of support to aspiring young entrepreneurs in the preparation of their business proposal, including, preparing a preliminary market study, drafting a business plan and participating in training activities on business management, inter alia; (b) the formalization of businesses under various legal forms (including self- employed); and (c)based on selected business proposals referred to above, the provision of matching grants and technical assistance and training/coaching activities to selected beneficiaries pursuant to the criteria and procedures established in the PIM; all in accordance with the provisions set forth in Schedule 4 to this Agreement. 3. Development of a regional program for value chains development with high employment potential through the provision of financing of payments under the Eligible Expenditure Program (EEP) for: (a) the preparation of value-chain action plans for the development of value-chains; (b) the provision of financing for value-chain investments to be selected pursuant to the criteria and procedures established in the PIM; (c) the provision of capacity building activities to assist potential beneficiaries in the implementation of their respective value-chain investment. Part 3. Institutional Capacity Building for Project Implementation Support The provision of support to the relevant Borrower's institutions responsible for Project implementation for the implementation, monitoring and evaluation of the Project, including through: (a) the provision of goods, services and financing of Operating Costs; (b) the development of a regional labor market monitoring mechanism; (c) the establishment and operationalization of a monitoring and evaluation system; (d) the development of a feedback mechanism for Project beneficiaries, and (e) the carrying out of awareness and communication events regarding the Project's activities. JI -6- SCHEDULE2 Project Execution Section I. Implementation Arrangements A. Institutional Arrangements. 1. The Borrower shall vest the overall responsibility for the coordination, monitoring and evaluation of the Project in the MTIP, and to this end, shall, through the MTIP: (a) (i) maintain, throughout Project implementation, the PMU with composition (including a national coordination unit and a regional operation team) and resources acceptable to the Bank and defined in the Project Implementation Manual, to be responsible for day-to-day management of the Project (including the procurement, financial management and safeguards aspects); (b) Ensure that the Project is carried out in accordance with the requirements set forth in a manual acceptable to the Bank (Project Implementation Manual or PIM); and (b) not assign, amend, abrogate, or waive the PIM or any of its provisions, except with the prior written approval of the Bank. In case of any conflict between the terms of the PIM and those of this Agreement, the terms and conditions of this Agreement shall prevail. 2. The Borrower shall maintain throughout Project implementation, the National Coordination Committee, the Regional Coordination Committee and the Provincial Coordination Committees, all with mandate and composition as described in the PIM. 3. The Borrower shall ensure, throughout Project implementation, the coordination with other agencies/entities participating in the implementation of the Project, including: (a) the ANAPEC for Parts 1.1 and 1.2(b) of the Project; (b) the SEFP/DRFP for Parts 1.2(a) and (c) of the Project; (c) the CRI for Part 2.1 of the Project; and (d) the MI for Parts 2.2 and 2.3 of the Project; all pursuant to adequate arrangements acceptable to the Bank and defined in the PIM. B. Conventions. 1. Without limitation to the provision set forth in Section I.A.3 above, to facilitate the carrying out of the Project, the Borrower , through the MTIP, shall enter into one or more agreement (Convention(s)) with the agencies/entities participating in the implementation of the Project under terms and conditions acceptable by the Bank, which shall include the following: (a) the Borrower's obligation to make available the funds necessary for Project implementation; and (b) the obligation of the agencies/entities participating in the implementation of the Project (including ANAPEC and CRI) to comply with the pertinent provisions of this Schedule, including the Anti-corruption Guidelines and the ESMF. 2. The Borrower shall exercise its rights and carry out its obligations under the Convention(s) in such manner as to protect the interests of the Borrower and the Bank and to accomplish the purposes of the Loan. In case of any conflict between the terms of the Convention and those of this Agreement, the terms and conditions of this Agreement shall prevail. -7- C. Safeguards. The Borrower, through MTIP, shall ensure that the Project is carried out in accordance with the Environmental and Social Management Framework (ESMF). Except as otherwise agreed by the Bank, the Borrower, through MTIP, shall not amend, abrogate, waive, or fail to enforce the ESMF, or any of its provisions. Section II. Project Monitoring Reporting and Evaluation The Borrower shall furnish to the Bank each Project Report not later than forty-five (45) days after the end of each calendar semester, covering the calendar semester. Section III. Withdrawal of Loan Proceeds A. General. Without limitation upon the provisions of Article II of the General Conditions and in accordance with the Disbursement and Financial Information Letter, the Borrower may withdraw the proceeds of the Loan to: (a) finance Eligible Expenditures; (b) pay: (i) the Front-end Fee and (ii) each Interest Rate Cap or Interest Rate Collar premium; in the amount allocated and, if applicable, up to the percentage set forth against each Category of the following table: Category Amount of the Loan Percentage of Expenditures Allocated to be financed (expressed in EUR) (inclusive of Taxes) (1) Goods, works, non- 15,309,500 100% consulting services (including Training), consulting services and Operating Costs for the Project (except for Parts 1.2(c), 2.2 and 2.3 of the Project (2) Payments for EEPs under 32,770,000 100% Parts 1.2 (c), 2.2 and 2.3 of the Project (3) Front-end Fee 120,500 Amount payable pursuant to Section 2.03 of this Agreement in accordance with Section 2.07 (b) of the General Conditions (4) Interest Rate Cap or 0 Amount due pursuant to Interest Rate Collar Section 4.05 (c) of the General premium Conditions TOTAL AMOUNT 48,200,000 B. Withdrawal Conditions; Withdrawal Period. 1. Notwithstanding the provisions of Part A above, no withdrawal shall be made: (a) for payments made prior to the Signature Date, except that withdrawals up to an aggregate amount not to exceed EUR 9,640,000 may be made for payments made prior to this date but on or after the date twelve months prior to the Signature Date, for Eligible Expenditures under Categories (1) and (2); and (b) for payments under Category (2) until and unless the Borrower has furnished evidence satisfactory to the Bank with respect to the achievement of the respective Disbursement-Linked Results (DLRs) as referred to in Schedule 4 to this Agreement and the additional supporting documentation set forth in the Disbursement and Financial Information Letter. 2. Notwithstanding the provisions of Part B.1(b) of this Section, if any of the DLRs referred to in Schedule 4 to this Agreement has not been achieved, the Bank may, by notice to the Borrower: (a) reallocate all or a portion of the proceeds of the Loan then allocated to said DLR to any other DLR; and/or (b) cancel all or a portion of the proceeds of the Loan then allocated to said DLR. 3. The Bank and the Borrower may agree from time to time, by exchange of letters, to modify DLIs or corresponding amounts for the DLIs set forth in Schedule 4 to this Agreement. 4. The Closing Date is September 30, 2024. -9- SCHEDULE 3 Amortization Schedule The following table sets forth the Principal Payment Dates of the Loan and the percentage of the total principal amount of the Loan payable on each Principal Payment Date ("Installment Share"). Principal Payment Date Installment Share On each April 1 and October 1 Beginning October 1, 2024 2.56% through April 1, 2043 On October 1, 2043 2.72% - 10 - SCHEDULE4 Disbursement Linked Indicators The DLIs and corresponding amounts may be adjusted from time to time by the Bank and the Borrower, based on the review pursuant to Section III.B.3 of Schedule 2 to this Agreement. Disbursement Linked Disbursement Linked Amount of Loan Allocated Indicator Description Result (expressed in EUR DLI#1: Number of youth DLR#1.1: 2,700 youth DLR#1.1: EUR 1,870, 000 beneficiaries having beneficiaries have completed Formula: for each 500 youth completed apprenticeship apprenticeship training in the beneficiaries having training in the Project Area Project Area, of which 45% completed apprenticeship are women, as further training, of which at least described in the PIM, from a 45% are women, baseline of 0 EUR 346, 296 may be made available for withdrawal by the Borrower, up to EUR 1,870, 000, from a minimum threshold of EUR 875,000. DLR#1.2: Cumulative 5,600 DLR#1.2: EUR 1,870,000 youth beneficiaries have Formula: from the baseline completed apprenticeship of 2,700 youth beneficiaries, training in the Project Area, for each additional 500 youth of which 45% are women, as beneficiaries having further described in the PIM completed apprenticeship training, of which at least 45% are women, EUR 322,414 may be made available for withdrawal by the Borrower, up to EUR 1,870,000, from a minimum threshold of EUR 875,000. DLR#1.3: Cumulative 8,800 DLR#L.3: EUR 1,870,000 youth beneficiaries have Formula: from the baseline completed apprenticeship of 5,600 youth beneficiaries training in the Project Area, for each additional 500 youth of which 45% are women, as beneficiaries having further described in the PIM completed apprenticeship training, of which at least 45% are women, EUR 292,187 may be made available for withdrawal by the Borrower, up to EUR 1,870,000, from a S- 11 - minimum threshold of EUR 875,000 DLR#1.4: Cumulative 12,300 DLR#1.4: EUR 2,630,000 youth beneficiaries have Formula: from the baseline completed apprenticeship of 8,800 beneficiaries for training in the Project Area, each additional 500 youth of which 45% are women, as beneficiaries having further described in the PIM completed apprenticeship training, of which at least 45% are women, EUR 375,714 may be made available for withdrawal by the Borrower, up to EUR 2,630,000, from a minimum threshold of EUR 875,000 DLR#1.5: Cumulative 15,800 DLR#1.5: EUR 2,630,000 youth beneficiaries have Formula: from the baseline completed apprenticeship of 12,300 beneficiaries for training in the Project Area, each additional 500 youth of which 45% are women, as beneficiaries having further described in the PIM completed apprenticeship training, of which at least 45% are women, EUR 375,714 may be made available for withdrawal by the Borrower, up to EUR 2,630,000, from a minimum threshold of EUR 875,000 DLI#2: Number of provinces DLR#2.1: Four (4) provinces DLR#2.1: EUR 3,500,000 and/or prefecture covered by and/or prefecture are covered Formula: for each province at least one business by at least one business and/or prefecture covered by development service development service provider at least one business providers selected, hired and selected, hired and development provider, implementing the delivery of implementing the delivery of EUR 875,000 may be made the entrepreneurship support the entrepreneurship support available for withdrawal by program in the Project Area program in the Project Area the Borrower, and up to as further described in the EUR 3,500,000 PIM DLR#2.2: cumulative eight DLR#2.2: EUR 3,500,000 (8) provinces and/or Formula: from the baseline prefecture are covered by at of 4 provinces and/or -12- least one business prefectures, for each development service additional province and/or providers selected, hired and prefecture covered by at least implementing the delivery of one business development the entrepreneurship support provider, EUR 875,000 may program in the Project Area, be made available for as further described in the withdrawal by the Borrower, PIM and up to EUR 3,500,000 DLI#3: Number of new DLI#3.1: one hundred fifty DLR#3.1: EUR 1,050,000 businesses legally established (150) new businesses legally Formula: for each five (5) and approved to receive a established by targeted new businesses legally matching grant in the Project beneficiaries and approved to established and approved to Area receive a matching grant receive a matching grant, under the post-creation phase with at least one (1) of of the regional businesses legally established entrepreneurship support by a woman, EUR 35,000 program, 20% of which by may be made available for women, as further described withdrawal by the Borrower, in the PIM, from a baseline of and up to EUR 1,050,000 0. DLI#3.2: cumulative four DLR#3.2: EUR 2,100,000 hundred fifty (450) new Formula: from the baseline businesses legally established of 150, for each additional by targeted beneficiaries and five (5) new businesses approved to receive a legally established and matching grant in the post- approved to receive a creation phase of the regional matching grant, with at least entrepreneurship support one (1) of businesses legally program, 20% of which by established by a woman, women, as further described EUR 35,000 may be made in the PIM available for withdrawal by the Borrower, and up to EUR 2,100,000 DLI#3.3: cumulative nine DLR#3.3: EUR 3,150,000 hundred (900) new businesses Formula: from the baseline legally established by targeted of 450 for each additional beneficiaries and approved to five (5) new businesses receive a matching grant in legally established and the post-creation phase of the approved to receive a regional entrepreneurship matching grant, with at least support program, 20% of one (1) of businesses legally which by women, as further established by a woman, described in the PIM EUR 35,000 may be made available for withdrawal by the Borrower, and up to EUR 3,150,000 -13- DLI#3.4: cumulative one DLR#3.4: EUR4,200,000 thousand five hundred (1,500) Formula: from the baseline new businesses legally of 900, for each additional established by targeted five (5) new businesses beneficiaries and approved to legally established and receive a matching grant in approved to receive a the post-creation phase of the matching grant, with at least regional entrepreneurship one (1) of businesses legally support program, 20% of established by a woman, which by women, as further EUR 35,000 may be made described in the PIM available for withdrawal by the Borrower, up to EUR 4,200,000 DLI#4: Number of DLR#4: Four hundred (400) DLR#4: EUR 4,400,000 MSMEs/cooperatives MSMEs/cooperatives Formula: For each forty (40) benefiting from the regional benefiting from the regional MSMEs/cooperatives value-chain support program value-chain support program, benefiting from the regional 20% of which are managed value-chain support program, by women, from a baseline of with at least 20% managed 0 by women, EUR 440,000 may be made available for withdrawal by the Borrower, up to EUR 4,400,000 - 14 - APPENDIX Definitions 1. "ANAPEC" means Agence Nationale de Promotion de l' Emploi et des Compitences, the National Agency for Employment and Competencies established pursuant to Law No. 51- 99 dated June 5, 2000, or any successor thereto acceptable to the Bank. 2. "Anti-Corruption Guidelines" means, for purposes of paragraph 5 of the Appendix to the General Conditions, the "Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants", dated October 15, 2006 and revised in January 2011 and as of July 1, 2016. 3. "Category" means a category set forth in the table in Section III.A of Schedule 2 to this Agreement. 4. "CRI" means Centre Rigional d'Investissement, the Regional Investment Center established in the Marrakech-Safi Region on January 9, 2002which legal status has been revised pursuant to Law No. 47-18, published in the Official Gazette No. 6754, dated February 21, 2019. 5. "Convention(s)" means the agreement(s) referred to in Section I.B.2 of schedule 2 to this Agreement. 6. "DRFP" means the Deligation Rigionale de la Formation Professionnelle established within the SEFP. 7. "Disbursement Linked Indicator" or "DLI" means in respect of Category (2), each of the indicators related to said Category as set forth in the table in Schedule 4 to this Agreement. 8. "Disbursement Linked Result" or "DLR" means in respect of Category (2), each of the results related to said Category as set forth in the table in Schedule 4 to this Agreement, on the basis of the achievement of which, the amount of the Loan allocated to said result may be withdrawn in accordance with the provisions of Section III.B of Schedule 2 to this Agreement. 9. "Eligible Expenditures Program" or "EEP" means a set of defined expenditures within the Borrower's Formation-Insertion, TAHFIZ and INDH respective budget programs, including conditional cash transfers incurred by MTIP under Formation-Insertion and TAHFIZ programs and MI under INDH for carrying out the Project activities under their responsibility. 10. "Environmental and Social Management Framework" or "ESMF" means the Borrower's Environmental and Social Management Framework, acceptable to the Bank, published on the Borrower's website and on the Bank's external website, on February 7, 2019, as the same may be amended from time to time with the Bank's prior consent. -15- 11. "General Conditions" means the "International Bank for Reconstruction and Development General Conditions for IBRD Financing, Investment Project Financing", dated December 14, 2018. 12. "MEF" means Minist re de 1'Economie et Finances, the Borrower's Ministry of Economy and Finances, or any successor thereto. 13. "MI" means Minist&re de l'Intirieur, the Borrower's Ministry of Interior, or any successor thereto. 14. "Ministry of Labor and Professional Insertion" or "MTIP" means the Borrower's Minist&re du Travail et de l'Insertion Professionnelle, or any successor thereto. 15. "MSMEs" means Micro, Small & Medium Enterprises. 16. "National Coordination Committee" means the Borrower's Comiti de Coordination Nationale du Project chaired by the MTIP, with composition and terms of reference as described in the PIM, responsible of providing overall policy oversight, inter alia. 17. "Operating Costs" means reasonable recurrent expenditures (none of which would have been encountered absent the Project), incurred in the account of Project implementation. Monitoring and evaluation, but excluding the salaries of the Borrower's public servants and/or permanent employees. 18. "PMU" means Project Management Unit established within MTIP (including a national coordination unit and a regional operation team) and referred to in Section I.A.1(a) of Schedule 2 to this Agreement. 19. "Procurement Regulations" means, for purposes of paragraph 85 of the Appendix to the General Conditions, the "World Bank Procurement Regulations for IPF Borrowers", dated July 2016, revised November 2017 and August 2018. 20. "Project Area" means the Marrakech-Safi region, or any other Borrower's region as agreed between the Borrower and the Bank. 21. "Project Implementation Manual" or "PIM" means the Borrower's manual referred to in Section I.A. 1 (b) of Schedule 2 to this Agreement, at all times in form and substance acceptable to the Bank, setting forth the details of all operational arrangements for the implementation, monitoring and supervision of the Project, including: (a) the respective roles and responsibilities for the implementation of the Project; (b) the accounting, financial management, auditing and reporting arrangements; (c) the procurement arrangements, including the Procurement Plan; (d) the monitoring and evaluation procedures including the selected indicators for measuring Project performance; (e) the DLIs and DLRs under Parts 1.2(b), 2.2 and 2.3 of the Project, including the procedures for verifying the achievement of said DLI; (g) the ESMF; (h) the annual work programs and budgets; and (i) all other relevant arrangements necessary for the carrying out of the Project; as the same may be amended from time to time with Bank's prior written consent. -16- 22. "Provincial Coordination Committees" means the Comitis de Coordination Provinciales responsible for coordinating and monitoring the implementation of Project activities at the provincial and prefecture level in the Project Area. 23. "Regional Coordination Committee" means the Comitj de Coordination Rigional responsible for coordinating the implementation of Project activities at the regional level. 24. "SEFP" means the Secritariat d 'Etat pour la Formation Professionnelle established within the Borrower's Ministry of National Education, Professional Training, Tertiary Education and Scientific Research. 25. "Signature Date" means the later of the two dates on which the Borrower and the Bank signed this Agreement and such definition applies to all references to "the date of the Loan Agreement" in the General Conditions. 26. "Training" means expenditures (other than for consultants' services) incurred in connection with the carrying out of training, seminars, and workshops under the Project.